In an opinion last week, Judge Engelmayer dismissed most of the SEC’s fraud claims against the software company SolarWinds over the so-called “SUNBURST” cyberattack in 2020 that is generally attributed to state-sponsored Russian hackers.

Judge Engelmayer allowed the SEC’s claims to proceed as to certain pre-SUNBURST statements on SolarWinds’ website touting its cybersecurity practices, but dismissed the SEC’s claims based on statements the company made after the fact, finding that those claims “impermissibly rel[ied] on hindsight and speculation.” For example, a Form 8-K filed after the attack allegedly left out certain details about the extent of the harm, but Judge Engelmayer noted that “perspective and context are critical,” including that the filing was made as the facts were evolving and that, overall, the Form 8-K “by any measure bluntly reported brutally bad news for SolarWinds.”

Judge Engelmayer rejected a novel theory advanced by the SEC that SolarWinds’ cybersecurity failures violated a provision of the Securities Exchange Act requiring issuers to maintain “internal account controls sufficient” to prevent unauthorized “access to assets,” finding that the language concerned “financial accounting,” not cybersecurity:

Continue Reading Judge Engelmayer: Securities Law Requiring “Internal Accounting Controls” Does Not Reach Cybersecurity Deficiencies

In an Order last week, Magistrate Judge Wang chided the parties in a terrorism funding case for having filed a joint, 73-page discovery letter, consistent with a pattern of “protracted letter-writing campaigns” that have embroiled the Judge in “day-to-day supervision” of discovery.

She ordered the offending letter stricken, but an an earlier one (at 54 pages) appears to be the type of correspondence sparking the forceful order, in which she cited Charles Dickens’ fictional case Jarndyce v Jarndyce, as illustrating the problem:

Continue Reading Magistrate Judge Wang Warns Against “Protracted Letter-Writing Campaigns” Over Discovery

In an opinion last week, Judge Engelmayer denied defendant’s motion for summary judgment regarding the “unorthodox transaction” exception to Section 16(b) of the Securities Exchange Act. Previously, the Second Circuit had vacated and remanded Judge Engelmayer’s earlier decision, which had granted summary judgment, on the grounds that the defendant had not “carried his burden” to show that there was no genuine dispute that he “did not have access to inside information.”

In line with the Second Circuit’s mandate, the Court reopened discovery on this limited factual issue. Ultimately, the only evidence on the relevant issue was testimonial. The plaintiffs allege that the defendant received inside information during a phone call, but the two participants to the call say they only discussed public information. Reviewing the evidence on remand, Judge Engelmayer held that the defendant still had not carried his burden to “indisputably” prove his affirmative defense.

As an initial matter, Judge Engelmayer pointed out that there is no consensus from appellate courts on the moving party’s burden at summary judgment when the moving party has the burden of proof on the merits of the issue:

Continue Reading Judge Engelmayer: Summary Judgment Is Not Appropriate Where “Uncontradicted” Testimonial Evidence Could Still Be Disbelieved By Jury

Last week, Magistrate Judge Cave ruled that the New York Attorney General’s Office (“OAG”) was protected from having to comply with a document subpoena under Eleventh Amendment sovereign immunity. The subpoena was issued by former Governor Cuomo, in connection with a defending against a civil lawsuit involving allegations overlapping with matters that OAG had investigated.

Judge Cave was faced with a a question that the Second Circuit has not yet resolved: whether “a subpoena to a state agency and subsequent efforts to enforce it are ‘the type of proceeding[] from which the Framers would have thought the States possessed immunity when they agreed to enter the Union.’” She concluded that OAG was immune:

By issuing the OAG Subpoena, and then seeking to enforce it through the OAG MTC, Mr. Cuomo has twice invoked ‘the Judicial power of the United States,’ to require the OAG to produce the Requested Materials, i.e., to ‘compel [the OAG] to act[.]’

Continue Reading Magistrate Judge Cave: Eleventh Amendment Sovereign Immunity Bars Enforcement of Document Subpoena to NY Attorney General’s Office

Last week, Judge Broderick granted NYU’s motion to dismiss a class action complaint brought by a “John Doe” alleging that NYU Law Review gives “preferential treatment to women, non-Asian racial minorities, homosexuals, and transgender people when selecting its members” due, in part, to the journal’s practice of “requir[ing] each applicant to submit a statement of interest that provides ‘a more comprehensive view of [him or her] as an individual.’” John Doe is a first-year law student, who “aspires to join his school’s law review.”

Continue Reading Judge Broderick Rejects as Speculative Anonymous Plaintiff’s Claims that NYU Law Review’s Diversity Policies Unlawfully Discriminate

On Monday, Judge Seibel ordered a plaintiff to re-submit an amended 56.1 statement response to comply with the Local Rules. Judge Seibel explained that the response, at 356 pages, was too long and argumentative, did not properly controvert certain of defendants’ statements, and did not include pincites when citing record evidence.

Summarizing the issues with plaintiff’s 56.1 response, Judge Seibel wrote:

Continue Reading Judge Seibel: 56.1 Response is Not the Occasion for “Context” or “Semantic Quibbles”

In an opinion last week, Judge Koeltl denied a motion to dismiss brought by NBC and Peacock, which are accused of infringing the plaintiff’s copyright to two videos in connection with a documentary about Rudy Giuliani’s infamous press conference in front of the Four Seasons Total Landscaping business—widely speculated to have been intended to take place at the Four Seasons Hotel. One video was of the press conference itself, and the other depicted confrontations between supporters of Joe Biden and supporters of Donald Trump.

Judge Koeltl rejected the defendants’ argument that using the videos as part of a documentary “forgives all copying” as fair use:

Continue Reading Judge Koeltl: Producing Documentary Does Not “Forgive All Copying” as Fair Use

At least four SDNY lawsuits have been filed against Columbia University relating to the recent campus protests, including a class action complaint filed April 29, accusing the University of breaching its contractual obligation to provide a safe learning environment, insofar as Columbia chose to respond to the protests by making classwork partially remote for the remainder of the school year:

Columbia has in no uncertain terms announced that the university is not safe for its Jewish students. But rather than clear the encampment, the administration decided to take the extraordinary step of shifting to a “hybrid” model of education for the remainder of the academic year, where students that don’t feel safe enough to attend class in person can view the class online. This absurd shift makes no attempt to solve the safety problem on campus, and at the same time, creates two very different educational experiences for Jewish and non-Jewish students. The vast majority of the student population, including these extreme demonstrators, get to attend classes in person, take tests in person, communicate with professors in person, and otherwise take advantage of the campus.

The Jewish students, on the other hand, get a second-class education where they are relegated to their homes to attend classes virtually, stripped of the opportunity to interact meaningfully with other students and faculty and sit for examinations with their peers. This policy shift is a clear admission that the campus is not simply experiencing a protest movement, which has happened to universities across the country for decades, but instead, has become a place that is too dangerous for Columbia’s Jewish students to receive the education they were promised.

The class action is before Judge Torres, who has scheduled a hearing on the plaintiff’s TRO application for tomorrow.

The other cases are:

Continue Reading Columbia University Faces Wave of Litigation Over Campus Protests

In two complaints filed last week, The Intercept Media, Inc, Raw Story Media, Inc. and AlterNet Media, Inc. became the latest companies to sue OpenAI for copyright infringement in violation of the Digital Millennium Copyright Act. The Intercept also included Microsoft as a defendant.

Both complaints were filed by self-identified “news organizations,” and allege that those organizations’ copyrighted works were used to train OpenAI’s generative AI systems, ChatGPT, on how to mimic human speech and writing. According to the news organizations, when deciding what information to include in the training materials fed to ChatGPT:

Continue Reading Copyright Infringement Lawsuits Against OpenAI and Microsoft Are Mounting